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Bond Market Opens Flat as Traders anticipate release of Q2 Calendar

Proshare
Tuesday,  April, April 10, 2018   7.00AM  /Zedcrest Capital

***Buhari declares to run for second term *** 

KEY INDICATORS

Inflation

14.33%

Declined by 0.80% in February from 15.13% in January 2018

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018

External Reserves

$46.55billion

Accreted 1.51% as at 4 April from $46.51bn as at 3 April 2018

Brent Crude

$68.51pb

Rose by 1.71% from $67.36pb on 6 April 2018


Bonds

The Bond market opened the week on a very quiet note, with a total of just about 1bn in executed trades over the trading period. We witnessed slight interest on the 2021 bonds, which consequently compressed yields by c.2bps on average. We expect yields to inch slightly higher tomorrow due to relatively weak demand from clients and expected resumption in OMO T-bill sales by the CBN. This is as we await release of the Q2 FGN Bond calendar by the DMO.

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

13.60

13.53

(0.09)

15.54 13-Feb-20

13.30

13.23

(0.04)

14.50 15-Jul-21

13.62

13.55

(0.12)

16.39 27-Jan-22

13.49

13.42

0.00

14.20 14-Mar-24

13.57

13.50

(0.02)

12.50 22-Jan-26

13.68

13.61

0.02

16.29 17-Mar-27

13.69

13.62

(0.01)

12.15 18-Jul-34

13.67

13.60

0.00

12.40 18-Mar-36

13.58

13.51

0.03

16.25 18-Apr-37

13.55

13.48

0.00


Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market trade on a bullish note, with demand mostly on the May-Dec maturities, while the long end remained flat. This came as the CBN held off on OMO for a second consecutive session, consequently compressing yields by c.10bps on average, with most demand witnessed on the last issued OMO bill (6-Dec) which compressed by as much as 30bps. We expect the market to remain bullish tomorrow, due to anticipated inflows from retail FX refunds. This should however be moderated by an OMO T-bill sale by the CBN to moderate excess liquidity in the system, currently estimated at c.N430bn.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-May-18

14.00

13.85

(0.10)

14-Jun-18

14.00

13.85

(0.10)

5-Jul-18

13.50

13.35

0.00

2-Aug-18

13.90

13.45

(0.10)

13-Sep-18

13.70

13.55

(0.20)

4-Oct-18

13.55

13.40

(0.05)

1-Nov-18

14.00

13.85

0.00

3-Jan-19

13.40

13.25

0.00

14-Feb-19

13.30

13.15

0.00

14-Mar-19

13.30

13.15

0.00

Source: Zedcrest Dealing Desk

 

Money Market

The OBB and OVN rates remained relatively stable, closing today at 3.33% and 3.50% respectively, as system liquidity remained significantly buoyant, estimated to close at c.N430bn from c.N500bn opening today. We expect rates to remain relatively stable tomorrow, barring a significant OMO sale by the CBN. 


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.33

3.67

Overnight (O/N)

3.50

4.00

Source: FMDQ, Zedcrest Researc h

  

FX Market

The Interbank rate remained relatively stable at its previous rate of N305.60/$, as the CBN intervened in the market to the tune of $210m in the Wholesale ($100m), SME ($55m) and Invisibles segments ($55m). The NAFEX rate fell by 0.09% to N360.33/$, while rates in the Unofficial market remained stable at N360.50/$. 


FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.60

305.60

CBN SMIS

330.00

330.00

I&E FX Window

360.01

360.45

Parallel Market

360.50

360.60

Source: CBN, FMDQ, REXEL BDC
 

Eurobonds

The NGERIA Sovereigns retraced slightly from its significant bullish run witnessed in the previous week, as investors took profits, mostly on the long end of the curve (27s - 47s), which lost as much as –0.45pt on price, with yields rising by c.4bps on average.
 

The Nigerian banks were mixed, with investors mostly bearish on the FIDBAN 22s (-0.60pt) and the FBNNL 20s (-0.44pt), while we saw slight buy interests on the FBNNL 21s and the Zenith and UBANL 22s. The SEPLLN 23s also declined slightly, last traded today at par (100).

Proshare Nigeria Pvt. Ltd.

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2.       Treasury bill yields Decline Further on Excessive System Liquidity

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4.       Slight Reversal in Bond yields as CBN holds off on OMO ahead of T-bills PMA

5.       PMA to Hold Tomorrow; T-Bills Indicative Rates

6.       Bond Yields Close bearish, as CBN Holds off on OMO

7.       Funding Rates Crash as CBN Refunds Banks for Lost FX Bids

8.       Bond Market Turns Bearish as Traders Take Profit Ahead of Q1 Close

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10.   T-Bills Rates Expected to Trend Slightly Higher

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14.   March 2018 FGN Bond Auction – Total Subscription Put At N142.81bn

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